Domestic Bliss at Virgin But International a Big Miss

One step forward, two steps back for Virgin Australia, which announced its half-year results today. They revealed that while the airline is making great progress as a full-service domestic carrier, its international business is going from bad to worse.

Numbers tell the story.

Virgin’s domestic operations made a pre-tax profit of $103m for the half year ended Dec 31, 2014, compared with $25.9m the previous year.

Yet losses on international services also accelerated with high loads – in excess of 80% – but terrible yields.

Virgin lost $49.50m on international in the second half of 2014, well up on the -$32m loss it recorded the previous corresponding period.

CEO JohnVirgin Australia’s international blamed “increased competitive pressure, particularly in the Southeast Asian and Europe/UK markets”.

He said improving international is a focus for Virgin and initiatives under way include:

  • adjusting freuqency and timings on its bali services to better match demand
  • introducing business class as Tasman and Pacific Island routes
  • integrating the management of NZ operations into the rest of international business
  • reducing the number of ports offering LAX service

Meanwhile, Mr Borghetto said the performance of Tigerair, which Virgin assumed full ownership of last October, is beginning to improve moving into marginal profit in the final quarter of 2014.

Overall, Virgin recorded an underlying profit before tax of $10.2m, which translated to a statutory loss after tax of $47.8m.

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